(Adds communications minister says Abdallahi retiring) NOUAKCHOTT, Nov 13 (Reuters) - Mauritania's ousted president was moved from house arrest in the capital to his home town on Thursday by the military junta which overthrew him, ignoring international demands to free him and restore him to office. The European Union threatened on Oct. 20 to apply sanctions to the Saharan Islamic state if constitutional rule under ousted President Sidi Ould Cheikh Abdallahi were not restored within a month. He was deposed in a bloodless coup in August. "From our point of view, this is more of a transfer of point of detention than a full liberation," a Western diplomat said. "This is not enough, this is not a participation, it's just moving from one cell to another," he said. To meet the EU's demands, Mauritania's rulers must release Abdallahi completely and relinquish their grip on power, another diplomat said. "What the international community asked for is that Sidi be freed, which means freedom of movement, and to participate in getting out of this crisis," he said. Abdallahi became Mauritania's first democratically elected president last year but was toppled on Aug. 6 by a group of generals led by presidential guard chief Mohamed Ould Abdel Aziz, whom Adballahi had tried to dismiss. Since then, he had been kept under house arrest by the junta that overthrew him. A member of the High State council said the ex-president had been "freed this morning" and taken to his home town of Lemden, some 200 km (125 miles) south of the capital Nouakchott. "He can meet whoever he likes, but he may not leave the town until further notice. It's a security measure." A member of the military government said Abdallahi would quit political life, though Abdallahi earlier told television channel Al Jazeera that he still considered himself the legitimate president of Mauritania. "He is going to retire from politics and leave Mauritanians to freely choose the way out of the current situation, that is what he told us," Communications Minister Mohamed Abderrahmane Ould Moine told a press briefing. The United States has imposed travel restrictions on some members of the military government and frozen some of its aid to Mauritania, the world's seventh biggest exporter of iron ore which also started producing oil in 2006. The World Bank and former colonial ruler France have also frozen some aid. The African Union has suspended Mauritania's membership over the coup, but several AU members in the region appear to have given tacit approval to the military takeover. Aziz and other coup leaders accused Abdallahi of bringing government to a standstill, and of failing to tackle economic and security challenges like high food and fuel prices and attacks by al Qaeda militants. (Reporting by Vincent Fertey and Hachem Sidi Salem; Additional reporting by Pascal Fletcher in Dakar; Writing by Daniel Magnowski; Editing by Alistair Thomson and Mark Trevelyan)
